E-Commerce giant Snapdeal are working towards a possible sale of the company. This was discussed at a company meeting on Tuesday where it’s Japanese investor Softbank appointed it’s second director in the e-tailer. While the exact details of the meeting remained confidential, it was reported that the proposal for sale of the company was one of the aspects discussed in this elaborate meeting.
Softbank is one of the largest share holders of Snapdeal and have been trying to expand their venture from the struggling enterprise to it’s more successful rival Flipkart. Other media repports suggested that contrary to popular perception, the venture with Flipkart may not successfully materialize out due to Softbank’s inability to convince the board of directors of Jasper Infotech, the company which owns Snapdeal. These reports suggested that the board of directors hadn’t reached a consensus over the terms and conditions of the deal which would in turn result in them not being able to move forward with it.
Snapdeal, which faces stiff competition from rival e-commerce giants, Amazon and Flipkart has been looking to raise fresh funds and have gone on a cost cutting spree in order to achieve this. It has significantly reduced it’s workforce and has quit any non core business venture.
Apart from Softbank, the other major investors in Snapdeal are Nexus Venture Partners and Kalaari capitals. While Softbank remains the biggest share holders, holding 33% of the stocks, Nexus Venture Partners and Kalaari capitals hold 10% and 8% of the shares respectively.
Snapdeal’s 7 member board of governors has adequate representation from the 3 major investors and the 2 co founders, Kunal Bahl and Rohit Bansal. A report in The Economic Times shows that the terms of the deal proposed by SoftBank towards the sale of the online marketplace firm to Flipkart will allow Snapdeal shareholders to get one share of Flipkart for over ten shares held in the company.
While Snapdeal is slowly losing momentum in terms of popularity in the market, Flipkart continues to dominate the market.